Opinion

Africa’s New Generation of Innovators

For years now, business leaders and investors from around the world have waited for the Africa Rising narrative to shift from promise to reality. The continent has understandably been the focus of increasing investment and attention since the turn of this century. With a young, urbanizing population; abundant natural resources; and a growing middle class, Africa seems to have all the ingredients necessary for breakaway growth—perhaps even outstripping the so-called tiger economies of East Asia a generation ago. Indeed, a 2010 report by the McKinsey Global Institute titled “Lions on the Move” expressly made this comparison, forecasting that consumer spending on the continent would grow by 40%, and GDP by $1 trillion, from 2008 to 2020.

And yet this tantalizing vision has remained just that—a dream perpetually around the next corner. A number of major business enterprises have recently departed from the continent, their leaders discouraged by the same obstacles that have confronted would-be investors for years: widespread corruption, a lack of infrastructure and ready talent, and an underdeveloped consumer market.

We have spent the past several years closely studying patterns of innovation success and failure in emerging markets, with a particular focus on Africa and East Asia, and we have learned from leaders of some of the world’s great companies how daunting the obstacles can be. But we have also been tracking the success of some innovators in Africa that flout the conventional wisdom—by building franchises to serve poorer segments of the population; creating markets that tap the vast opportunity represented by nonconsumption; internalizing risk to build strong, self-sufficient, low-cost enterprises; and integrating operations to avoid external nodes of corruption. Their experience paints a hopeful picture of an Africa that can indeed fulfill the promise of prosperity. One young entrepreneur summed up the lift that homegrown success can provide by observing, “When the solution comes from within, we start believing in ourselves. We start trusting that we can do this, we can go forward.”

How have these innovators, many of whom are local entrepreneurs, found a path where so many larger, better-resourced enterprises have hit a wall? In this article we outline their market-creating innovation model and describe how it generates significant growth in both revenue and employment. We also describe methods for spotting nonconsumption, the fundamental opportunity on which this model capitalizes. Finally, we offer some suggestions for policy makers, investors, and entrepreneurs about how to increase both the number and the impact of these innovative enterprises.